A bill has been introduced in the New Mexico legislature that would more than double the tax rate on OTP — tobacco products other than cigarettes, such as smokeless and cigars — from 25% of the product’s value to 57% of the product’s value.
Perhaps more significant is the bill’s expanded definition of “tobacco products,” which would be redefined to include “any product containing tobacco that is intended or expected to be consumed without being combusted, unless it has been approved by the United States food and drug administration as a tobacco use cessation product and is being marketed and sold for that approved purpose.” This could arguably cover electronic cigarettes, which generally contain a tobacco solution that is consumed without being combusted.
Will the bill be construed to cover electronic cigarettes, which thus far have escaped states’ efforts to generate revenue from tobacco? Stay tuned.
For questions and/or comments, please contact Bryan Haynes, Troutman Sanders Tobacco practice partner, at 804.697.1420 or by email.